Why Are China’s Households in the Doldrums?

Jeffrey Dawson

No 20230927, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: A perennial challenge with China’s growth model has been overly high investment spending relative to GDP and unusually low consumer spending, something which China has long struggled to rebalance. As China attempts to move away from credit-intensive, investment-focused growth, the economy’s growth will have to rely on higher consumer spending. However, a prolonged household borrowing binge, COVID scarring and a deep slump in the property market in China have damaged household balance sheets and eroded consumer sentiment. In this post, we examine the impact of recent shocks on Chinese household behavior for clues around the outlook for reviving consumption and economic growth in China.

Keywords: China; international economics; macroeconomics (search for similar items in EconPapers)
JEL-codes: E2 F00 (search for similar items in EconPapers)
Date: 2023-09-27
New Economics Papers: this item is included in nep-cna and nep-ger
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